RCom Embarks On Expanding Its Submarine Cable Business
The entire cost of the cable will be covered by pre-sales to customers, RCom says.
Global Cloud Xchange, the submarine cable and cloud business arm of Reliance Communications Ltd., is building a new underground sea cable system that will quadruple its data carrying capacity between Europe, India and Hong Kong.
The Eagle submarine cable system will connect India to Italy in Europe and Hong Kong in Asia-Pacific region, William Barney, co-Chief Executive Officer of RCom told BloombergQuint. The Anil Ambani-led company is looking to focus on its enterprise business after elder brother Mukesh Ambani agreed to buy its wireless assets.
The full cost of the cable will be covered by pre-sales to customers and we have already pre-sold 50 percent of the $600 million cost, Barney said. In fact, we may end up with $800 million in pre-sales, he added.
GCX will have five cable systems when Eagle gets commissioned by December 2020. It will replace some of the existing cable systems that will be nearly 30 years old by 2025.
GCX will be one of its largest revenue generators for RCom which will embark on a new business model once it completes the restructuring of the wireless business. Its revenue will more than triple to more than $1 billion once Eagle takes off, said Barney. It currently has gross margins of 80 percent, and despite pressure on bandwidth pricing, hopes to maintain these margins, Barney added.